The department store group Galeria Karstadt Kaufhof dares to take a decisive strategic turn: While the company was previously organized largely centrally, in future much more responsibility will be delegated to the management of the individual branches. The local management should even have a say in the composition of the range.
This step is correct. Because those responsible on site know the wishes of their customers better than the head office. They keep a close eye on their competition next door. They see where there are gaps and thus opportunities, and they also know where cooperation with local partners can bring them new customers. However, this decision does not guarantee success. A few hurdles have to be overcome first.
The first is culture change in the mind. Many branch managers, who have been told everything for years, suddenly have to think entrepreneurially. And everyone in the management in Essen has to accept that controls have to be relaxed for this. You have to allow mistakes in order to learn from them. To do this, trust must be quickly rebuilt, which was destroyed in the past.
And it also needs very precise rules of the game, what is decided locally and what is organized centrally, so that the spirit of optimism does not quickly turn into anarchy – or disappointment. Of course, an individual composition of the range has its limits. Otherwise you run the risk of losing the advantages of central purchasing and, in the worst case, of disappointing customer expectations.
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Customer patience with the Galeria brand is limited
Another major challenge: linking such a decentralized model to e-commerce. This presupposes that the system knows at all times which article is in which branch or warehouse and how quickly it is available. And then the logistics must be able to meet the customers’ requests for collection or delivery, ideally on the same day. It may sound trivial, but it isn’t.
If the department stores are to become popular meeting places in the city again, they also have to be renovated quickly so that customers feel comfortable again and the promised new services can be offered quickly. This is a feat of strength, which is probably the biggest hurdle given the tight finances.
For those responsible, it is probably the last attempt. They have too often raised great expectations of the department store of the future and then not fulfilled them. Most people will no longer have much patience with the Galeria brand.
More: The plans for the renovation – this is how Galeria should have a future